Falling house prices during the current economic downturn were wholly expected, according to the Royal Institution of Chartered Surveyors (Rics).

Commenting on Nationwide''s latest monthly house price index, which shows a 12.4 per cent annual decrease in property values, Rics said that the figures were not surprising given the economic turmoil in the financial markets.

Rics added that house prices were likely to continue falling, but said that a cut in the Bank of England''s base rate next week would allow lenders to reduce the cost of borrowing.

The institution said: "The recent increase in some mortgage rates and the continuing squeeze on the supply of loans suggests that further price falls are likely over the coming months.

However, Rics claimed that a rate cut alone would not lead to a recovery in the property sector at a time when the economy is faltering and unemployment is rising.

According to the Guardian, the number of people left jobless in the wake of the credit crunch could top two million.

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